By Patricia Daddona
March 25, 2011
Groton – It takes about 40 people to maintain, fuel and store aircraft at Columbia Air Services, but the top executive there says taxes proposed on aviation property and labor could change that.
Tom Dunn, the company’s chief executive officer, and colleagues at Lanmar Aviation and Saunders Aircraft Sales LLC, all of which are based at the Groton-New London Airport, say the proposed levies will drive aircraft owners to airports in nearby New York and Rhode Island, where property and services are not taxed.
“We’ve been trying to maintain our work force and we haven’t had a lot of layoffs; we’ve combined some positions,” said Dunn. “But if we lose business to a neighboring state, or in general, it would force us to cut back and shrink.”
Changes proposed by Gov. Dannel P. Malloy to close a more than $3 billion state budget gap include restoring the sales tax on labor for small aircraft and imposing a 20-mill property tax on 70 percent of the property value. The sales tax is slated to increase from 6 percent to 6.35 percent.
Estimated savings would total $3.91 million, with all but $100,000 of that coming from the proposed property tax, said Gian-Carl Casa, undersecretary of legislative affairs with the state Office of Policy and Management.
“These taxes were proposed as part of a comprehensive package under the philosophy of shared sacrifice, where everybody both geographically and economically would have to pull together to get this state back on solid fiscal footing,” said Casa. “As part of that, the governor felt that airplane owners should be part of that solution.”
Electric Boat has one plane running a regular shuttle back and forth to Washington, D.C., and Newport News, Va., and another that’s available for other trips, said Robert Hamilton, EB’s director of communications. Both planes are hangared at the airport, he said.
The proposed taxes are “still up in the air, but obviously any large increase (in cost) would be something we have to look at,” Hamilton said. “We’d have to consider all of our options. We’re watching it.”
State Sen. Andrea Stillman, D-Waterford, has been responding to letters, phone calls and emails as she tries to interest chairmen of the Finance Committee and key people in Malloy’s administration in possible compromises. She could not specify details yet.
“I think it’s a valid concern similar to the boating industry, because (aircraft owners) could just pick up and move their property somewhere else,” Stillman said. “It could be a negative economic impact to our region.”
The aviation industry has been hit hard by the recession but is starting to climb out of it, said Catherine Young, the airport manager. As a state employee she is not permitted to comment on the pending debate about proposed taxes on her industry, but she did note that in 2010, for the first time in three years, airport activity increased slightly, from 40,000 takeoffs and landings to 41,991.
“Like many businesses, there’s a very slow rebound, and that’s what we seem to be seeing,” Young said.
That rebound would be cut short if taxes are imposed, said James Edwards, director of FBO services at Lanmar, and Gordon Ramsay, sole proprietor of Saunders.
“Half of our maintenance and avionics customers are from out of state,” said Edwards, who employs 35 mechanics, technicians, dispatchers and other workers. “Layoffs are possible. That would be the fear. Lose revenue, lose traffic and lose jobs.”
Edwards added that the state would never see the projected revenue precisely because clients would move out of state and avoid the taxes.
Ramsay, the broker, would survive, but his absence at the airport, where he could probably no longer afford to set up shop, would be felt, he said.
“I could sell airplanes that are in Brazil, Texas, Canada,” he said. “So although (the taxes) wouldn’t put me out of business, it would give me pause to base my business on the airfield. I could put my business in a home office and that would take business out of the local economy.”
According to Craig Dotlo, the Northeast regional representative for the Aircraft Owners and Pilots Association in Frederick, Md., the property tax alone for a 2011 Piper Arrow would be more than $5,500. Today, by comparison, that same owner is limited to a $90 registration fee.
If the property tax is approved, that same plane could be hangared in New York, Massachusetts or Rhode Island for the cost of registration alone, Dotlo said in testimony to the legislature on March 7.
AOPA is a not-for-profit trade group that represents the interests of over 414,000 members nationwide – including more than 4,812 pilots and aircraft owners in Connecticut.
“It’s like everything else,” said Dunn of Columbia Air Services. “Everybody wants (the budget deficit) to be fixed, but not at their expense. The state has huge cash needs right now and nobody wants their taxes raised, but we can’t do something that’s going to cause more harm.”